May 28 (Bloomberg) -- KKR & Co. LP and Bain Capital Partners LLC hired Goldman Sachs Group Inc. for a $1 billion initial public offering of Toys R Us Inc., the retailer the buyout firms purchased in 2005, according to people with knowledge of the matter.
The filing for the U.S. listing may come as soon as today, said the people, who declined to be named because the discussions are private.
Representatives of KKR, Bain and Goldman Sachs declined to comment. Calls to Kathleen Waugh, a Toys R Us spokeswoman, after regular business hours weren’t immediately returned.
Private-equity firms, which spent a record $1.6 trillion on deals from 2005 to 2007, are using public market offerings to pay down debt and reap profits from companies they own. KKR, based in New York, has completed IPOs for chipmaker Avago Technologies Ltd. and retailer Dollar General Corp. during the past year.
Bain, based in Boston, KKR, and Vornado Realty Trust in New York bought Wayne, New Jersey-based Toys R Us for $7.5 billion, including assumed debt.
Sales at U.S. retailers climbed in April for the seventh straight month, led by automobile dealers and building-material stores, according to Commerce Department figures released on May 14. Purchases rose 0.4 percent, exceeding the median estimate of economists surveyed by Bloomberg. That followed a 2.1 percent gain in March that was larger than previously estimated.
Retail purchases will climb 2 percent to 2.5 percent this month, less than previously forecast, the International Council of Shopping Centers said May 25.
The New York Post reported the Toys R Us plans yesterday on its website. JPMorgan Chase & Co. has also been hired to help lead a banking group that includes Bank of America Corp. and Credit Suisse Group AG, according to the newspaper.
Toys “R” Us is forging ahead with its sale even after the European debt crisis pushed the Standard & Poor’s 500 Index down 7.1 percent this month and prompted at least 20 companies around the world to postpone or withdraw IPOs. Initial offerings from U.S. companies backed by private-equity firms are also losing money for investors for the first time in a least a decade.
The 14 initial sales by private-equity funds this year have fallen 2.8 percent in the first month of trading through May 26 after averaging gains every year since at least 2001, data compiled by Bloomberg and Greenwich, Connecticut-based Renaissance Capital LLC show.
While the IPOs have beaten the S&P 500 by 0.9 percentage point in the first month, companies without support from buyout firms outperformed the benchmark gauge for U.S. stocks by 6 percentage points.
Buyout funds are turning to IPOs to offload some of the $2 trillion in leveraged buyouts made during the credit-market bubble. The largest rebound in the S&P 500 since the Great Depression had spurred private-equity owners to turn to IPOs after returning less money to clients last year than at any time since at least 2000.
Money raised by LBO firms fell 78 percent to $35 billion in the fourth quarter of 2009, according to Preqin Ltd. of London, after the collapse of New York-based Lehman Brothers Holdings Inc. a year earlier stymied deals and froze credit markets.
KKR and Bain are pressing ahead with what may be the biggest initial U.S. offerings of 2010.
HCA Inc., the hospital chain bought four years ago in a $33 billion LBO led by KKR and Bain, filed this month to sell as much as $4.6 billion in shares. The Nashville, Tennessee-based company’s U.S. IPO would be the largest since Visa Inc. of San Francisco raised $19.7 billion in March 2008.
NXP Semiconductors NV, the Dutch chipmaker owned by KKR and Bain, said in April it will seek to sell $1.15 billion of shares. Apax Partners LLP in London was also among the private-equity funds that acquired Eindhoven, Netherlands-based NXP from Royal Philips Electronics NV of Amsterdam in 2006.